A close cousin to ignoring the bank reconciliation is maintaining an excessive number of bank accounts.

Rather than using their church accounting software to take care of measuring and tracking restricted giving, some churches open separate bank accounts for each new special gift that may arise.

This results in a number of problems:

Burdens the accounting staff with extra work and contributes to the poor bank reconciliation management we discussed in the previous post.

Creates a great opportunity for a fraudster to play a very effective “shell game”.  With multiple bank accounts and limited controls, an embezzler can shuffle funds among the accounts to create a dense smokescreen, making detection extremely difficult. 

Key: The best practice is to gave as few bank accounts as possible coupled with strong internal controls and recordkeeping.